Is Apple Going Straight to the Compost?

Larry Jia, Staff Writer

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The stock prices of Apple Inc. (AAPL) from the past year.

Photo courtesy of Yahoo Finance.
The stock prices of Apple Inc. (AAPL) from the past year.

Lately, Apple Inc. (AAPL) has hit some turbulence regarding market share, stock price, and innovation. Apparently, updating a processor on the new iPhone or making a laptop gold is just not cutting it for consumers anymore. There are various reasons why Apple, formerly the “Most Valuable Company on Earth,” is no longer the reigning electronics superpower. Mostly stemming from the death of its heralded leader Steve Jobs in 2011, Apple has lost market share in key regions, such as Asia, to cheaper, native smartphone-makers such as Xiaomi, Huawei, and Oneplus. Furthermore, the lack of innovation is both disturbing for the company’s valuation as well as the stock price, as it has dipped approximately 28% in the past year. Key issues may allow investors to realize the cold, hard fact that Apple may not be as fresh as it once was.

The competition Apple is facing in both domestic and international markets has served to decrease the sphere of influence that the company once had. For example, in 2011 Apple controlled approximately 27% of the total US market share, with other leading producers, such as Blackberry, Android OS devices, and Windows phones trailing distantly. But within the last five years, the domination within the domestic market has dropped to approximately 15%. For all intents and purposes, comparing smartphone sales in the international market is sobering. In China, where nationalistic pride in rising high-tech industries, Chinese electronic makers such as Xiomi have enjoyed jumpstarted success. In addition, as China is ranked #82 in GDP per capita, PPP, cheaper and more accessible models greatly appeal to a wider market within China. Net electronics sales have decreased 3% in the 2015 fiscal year, the only negative year in modern Apple history. These troubling figures point to a larger issue: the lack of innovation that fails to capture the imagination of consumers.

In the past, Apple has had a way of captivating the customer like no other company could. Whether it is the gleaming edges, or seamless software integration, each Apple model was revolutionary in some aspect, relating to hardware or software. But, in recent years, trends have developed that Apple has fallen trap to: the lack of sporadic revolutions. Specifically, on average, Apple manages to completely change an entire market every five years, according to Forbes magazine’s November 14, 2015 issue. For example, the iPod forever changed the way we listen to music, the iPhone forever changed the way we communicate, the iPad forever changed the way we worked. But, within the past five years, the most revolutionary device has been the Apple Watch, a misguided concept idea that undoubtedly was meant to be a game-changer. However, it has failed to fulfill promises of rampant sales, as production in China toned down, and sales nearly halved. Thus, innovation, which has been infused in Apple’s DNA since its founding day, is beginning to slow.

Apple Values Privacy

An article about Apple in February 2016 must also include the ongoing examination with the FBI. Days after the San Bernardino attack, the FBI concluded that the two terrorists, who killed fourteen civilians, used customized and encrypted iPhones to communicate. Thus, even when discussing the financials of such a large corporation, domestic affairs concerning privacy vs. security must also be addressed. With the release of iOS 9, Apple further allowed third-party developers to permeate the App Store with applications meant for encryptions, especially after the NSA branding. However, it is simple: in such a connected world, it is nearly impossible to maintain both security and privacy. It is time for the American people to choose between the continuation of early 21st century NSA data collection programs, or the inevitable horrors that this technology may be used for. So, in the words of FBI director, James Comey, “We have awesome new technology that creates a serious tension between two values we all treasure: privacy and safety. That tension should not be resolved by corporations that sell stuff for a living.”

Relying only on branding, this article was not meant to be a factual, in-depth examination of Apple’s financials, or initiate overly-complicated statistical tests on stock price, but simply a heads-up to both Apple and consumers of the dangers the corporation faces. So, as the apple that once gleamed so brightly on the grocery store display table failed to maintain the status quo it set, the appeal has begun to fade. Maybe it could be speculation, or maybe Apple is destined for the compost pile anyways.

 

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